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The Ultimate Guide To
Employment in Norway

Norway Facts

Population size: 5,271,958
Currency: The national currency is the Norwegian Krone (NOK), which is equal to USD 0.11.
Capital city: Oslo
Languages spoken: Norwegian, Sami
Ease of Doing Business: 6

Employing in Norway: What You Need to Know

Norway’s employment law is codified by the Norwegian Employment Act of 2005. The Employment Act requires the employment contracts to be in writing. It is interpreted by the general courts. It is recommended that professional advice be sought when employing in Norway.

 

Key Factors to Consider When Employing in Norway

There are several key areas to be aware of within Norway’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department.  These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.

  1. Contracts

    The Working Environment Act requires a written contract of employment to be provided in all employment relationships. This applies both to permanent and temporary work – irrespective of the duration of employment.

    The contract must state factors of major significance for the employment, such as a description of the place of work, the work to be performed, the trial period, the wage and wage-payment procedures, whether the position is permanent, fixed-term or temporary, the duration and disposition of the agreed daily and weekly hours, length of breaks, supplements and other remunerations not included in the pay, the number of vacation days and holiday pay, the period of notice required upon termination of employment and any relevant information concerning collective agreements regulating the employment relationship.

Employee Entitlements

Information Explanation
Working on Sundays ?
According to the Norwegian Working Environment Act, working on a Sunday of any other public holiday is not permitted, however there are several exceptions that have been made.
 
Anyone within the allowances, who chooses to work on a Sunday, must in return be given the following Sunday as a day off, the worker must also be given extra pay for any hours worked on a Sunday or public holiday.
Time Off Work ?
Employees in Norway are entitled to receive paid annual leave from their work, each year. Annual leave allows individuals to take time off away from work, yet still get still receive a wage. In Norway workers from both the public and private sector are entitled to 4 weeks and 1 day of leave. In certain areas of work, it has been agreed that workers are entitled to an extra 4 days of holiday. Employees who are over the age of 60 years old are entitled to receive an extra week of annual leave.
 
All workers in Norway are entitled to annual leave, yet in order to be eligible for payment while using their leave, employees must carry out a certain amount of work. If an employee has been with a business for a whole qualifying, working year (Calendar Year), then they will be entitled to receive their full working wage. However if the employee has only been with the business for a short while then they will only receive a wage equivalent to how long they has worked of the company.
Medical Leave ?
If an employee feels that they are too sick to come into work then they are entitled to self certified sickness absence. An employee is allowed to inform their employer that they are too sick to attend work for 3 days before requiring a doctor’s certificate, to declare it.
 
If the employee feels that they are still too ill to attend the workplace after eh 3 days period has ended then they must contact their doctor, who will then carry out an assessment of the patient and decide whether they are eligible for more time off work and a doctor’s certificate.
 
Employees may only have 4 self certified sickness absences in each 12 month period of time. The employee may also only be eligible for self certified leave once they have been working at the business for a total of 2 months.

Employment Termination in Norway

Information Explanation
Termination of Employment ?
In Norway an employee can choose to end their employment contract at any time, however they must give notice and work for the full amount required by there employer. If the employee does not work the full notice period or chooses to not carry out their duties properly, then they will not be entitled to any wages earned during their notice. All employers have different notice periods in which they ask their employees to work, once their employment contract has been terminated. By law the notice period will not begin until the start of the following month of the termination; therefore if an employee chooses to end their contract on the 3rd of the month then they will have to complete the rest of the month before their notice period will begin, on the 1st of the next month.
 
Before an employee’s contract has been officially terminated, they will be expected to attend a meeting with their employer in order to discuss the termination. If the employee is leaving through the choice of the business then the employer will take the meeting as an opportunity to explain to them exactly why they are being removed from the company. If the employee is a member of a union then they can choose to have a union representative attend the meeting with them.
 
By law, a business can choose to end their employee’s contract for a range of reasons, such as cut backs within the company, or the employee failing to for fill their job roll. However it is illegal for an employer for end a contract due to a dislike of the employee. Any notice of termination must be put into written form with information on the employee’s right and deadline for filing a lawsuit against the company.

Probation

Information Explanation
Probation Period ?

The probation period may be agreed for up to six months. If an employee has been absent from work during the probation period, the employer may extend the agreed trial by a period corresponding to the period of absence.

Such an extension may only take place when the employee has been informed of this possibility in writing at the time of his appointment, and when the employer has informed the employee of the extension in writing prior to the expiration of the probation period.

The right to extend the probation period shall not apply to absences caused by the employer. The Ministry may issue regulations permitting agreement on a probation period longer than six months in the case of certain groups of employees.

Using Shield GEO EOR Services: How We Can Help You

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Norway. For companies, which intend to employ their staff directly through their incorporated Norwegian entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Norway.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition, Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Norway.

The Shield GEO solution is an attractive alternative where:

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in Norway

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in Norway

– the company needs help with tax, employment, immigration and payroll compliance in Norway

Shield GEO can contract directly with the company to employ and payroll their staff in Norway. Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits.  Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.

A GEO EOR Solution vs DIY Employment in Norway

Companies entering Norway must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities. A GEO or Norway Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a local entity established that can run payroll.

A DIY approach will typically take 2-3 months until there is a properly incorporated entity ready to run payroll and cost. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.

Using Shield GEO Employer of Record Services in Norway

Payroll

Payroll Norway
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote

Notes

Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.

Currency ?

The national currency is the Norwegian Krone (NOK), which is equal to USD 0.11.

Tax Returns Supplied

Yes

Employers Social Security and statutory contributions

Social Security Contributions: 14.1%, calculated on gross salary.

Employees Social Security and statutory contributions

Social Security Contributions: 7.8%, calculated on gross salary.

Payroll and Tax in Norway

There are specific rules that apply to payroll and taxation in Norway. The country eased the process of paying taxes for companies, by reducing the corporate income tax rate for 2016.

Payroll in Norway can, however, be complicated. If you have employees stationed in Norway, you must run a payroll through a Norwegian registered entity. Regardless of the method you choose, you must report your employees’ income, tax deductions and national insurance contributions every month.

Typically, payroll includes:

  • “A-meldingen”: Regardless of the setup chosen, it is mandatory to report employees’ income, tax deductions and national insurance contributions every month;
  • National insurance contributions, both from the employee and employer, alternatively assistance with registering National Insurance Confirmations (NIC) from your home country if applicable;
  • Holiday pay deduction and annual holiday payment;
  • Pension deduction, administration and payments, when required to have a Norwegian pension;
  • Sick pay and parental pay, for employees covered by Norwegian National Insurance;
  • Payments of wages, or payment advice;
  • Insurances (including workers’ compensation) when required;
  • The deposit of tax deductions into a dedicated bank account, for those with tax liability in Norway;
  • Assistance with obtaining a liability waiver.

Your Payroll Options in Norway

Information Explanation
Remote Payroll ?

A remote payroll system is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Norway. Under Norwegian law, there are two options available:

  • Register a subsidiary in Norway for employment purposes;
  • Enlist the services of an employment provider.
Local Payroll Administration ?

In some cases, a company will register their business in Norway under one of the forms available: companies limited by shares (AS or ASA); fully liable partnerships (ANS); limited partnerships (KS, DA); sole traders and branches.

However, it may prefer to have another company administering its payroll.  This can be accomplished through a payroll provider.

It is important to consider that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll ?

Larger companies with a commitment to Norway may wish to run their own local payroll for all employees, foreign and local.  In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff.

There will be a need for in country human resources personnel who have the background needed to manage a Norwegian payroll, and can fulfil all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations.  The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Norwegian employment laws.

Fully Outsourced Payroll & Employment ?

Companies can outsource the employment and payroll of their staff in Norway to a GEO, like Shield GEO. This is possible for both foreign workers and Norwegian nationals. This is the easiest, fastest and safest way to payroll staff in Norway.

Shield GEO manages all aspects of payroll for workers in Norway, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

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Setting up payroll in Norway

Information Explanation
National Currency ?

The national currency is the Norwegian Krone (NOK), which is equal to USD 0.11.

Employee Information Required ?
When a new employee starts work with a new business, it is very important that the employer has all the correct information they require about the employee. The information required includes:
  • Full Name
  • Address
  • Telephone number(s)
  • Emergency Contact
  • Personal ID number
  • Tax Deduction Card
Tax Registration Requirements ?
For anyone coming to Norway and wishing to work and stay for more then 3 months, then they must visit their local tax office and apply for a tax deduction card. They must then pass the card onto their employer so that they can deduct the correct amount of tax from their salary each pay day.
Social Security Registration ?
When in Norway, as soon as an individual begins work and gives their employer their tax deduction card, then they will become a part of the social security system and be eligible for receiving benefits.
 
 
Documentation Required for New Employees ?
In Norway employers are legally required to provide their employees with an employment contract.
There are several items which must be included in the contents of the written contract.
These include the following-
  • The duration of the employment
  • Employee wage (including how often they will be paid and how payment is made)
  • The probationary period (usually six months)
  • Terms for giving notice (during and after probationary period)
  • Working hours
  • The job description (including the duties, job title and other information for the employee)
  • Holiday leave

Tax Figures

Information Explanation
Corporate Income Tax ?

Corporate Income Tax: 27%, calculated on taxable profit

Norway made paying taxes less costly for companies by reducing the corporate income tax rate.

Income Tax Rate ?
Grossed income Tax Rate (%)

Which income will be taxed in Norway?

In case you are an employee:

  • Live in Norway? (min. 183 consecutive days over 12 months) You must pay tax on your worldwide income there.
  • Lived in Norway less than 183 consecutive days? You are not considered tax resident and only pay tax on income earned in Norway.
  • Income from other EU countries? Check you never pay tax twice on the same income.

To calculate your total tax bill:

1. Work out your taxable income by subtracting any applicable allowances or deductions for expenditure

2. Work out the rate that applies to it by combining these 3:

  • combined national and municipal income tax — 28%( 24.5% in Finnmark and Nord-Troms counties).
  • top tax — 0 — 12% ( depending on your income)
  • social security contribution (NIS) — 7.8%.

Before or on starting work in Norway, you must:

  • apply to your local tax office for a tax deduction card
  • give it to your employer — they will deduct the percentage stated on the card from your salary.

You must also file a tax return ( selvangivelse) by 30 April every year.

Which income will be taxed in Norway?

In case you are a self-employed:

  • Live in Norway? (min. 183 consecutive days over 12 months) You must pay tax on your worldwide income there.
  • Lived in Norway less than 183 consecutive days? You are not considered tax resident and only pay tax on income earned in Norway.
  • Income from other EU countries? Check you never pay tax twice on the same income.

To calculate your total tax bill:

1.     Work out your taxable income by subtracting any applicable allowances or deductions for expenditure

2.     Work out the rate that applies to it by combining these 3:

  • combined national and municipal income tax — 28%(24.5% in Finnmark and Nord-Troms counties).
  • top tax — 0 — 12% (depending on your income)
  • social security contribution (NIS) — 11%.

You must file a tax return for self-employed workers (form RF-1030) by 31 May every year.

Sales Tax ?

VAT: 25%

Withholding Tax ?

Dividends: 0% – 25%

Interest: 0%

Royalties: 0%

Other Tax ?

Stamp Duty: 2.5%

Real Estate Tax: 0.2% – 0.7%

Double Taxation Relief based on credit method

Income Tax (Personal Allowance) ?
In Norway many employee tax deductions are taken directly from the employee’s salary, before it is paid to them. These taxes include income tax, social security contributions and church taxes. In order for the tax authorities to calculate all individuals’ taxes correctly, all workers must provide them with their tax information.
 
This must be done in the form of a tax return. The tax return must include information such as income, assets and income deductions; the return must then be checked and submitted before the 30th April, each year.
 
Employers in Norway must deduct all employees taxes before they are sent to the employees, and they must calculate the employee’s taxes based on their rate, stated on each of their employee’s personal tax deduction cards.
 
At the end of the year, employers must complete a form called the Certificate of Pay and Tax Deductions (End of year Certificate), for each of their employees. The End of Year Certificate must state the employees total salary earned, any remuneration paid to the employee and the total of any taxes deducted.
Time to prepare and Pay Taxes ?

83 hours

Time required to start a Business ?

4 days

Payments

Information Explanation
Payment Mode ?
There are a range of ways in which Norwegian employers can choose to pay their employees salaries. These include Electronic payments, cash or cheque. In most large businesses, employers will use the system of electronic payment to settle the employee’s wages. Electronic payments are a fast and simple way of transferring money from one account to another. They ensure that the employees receive their money on the day they expect, and any amendments that are required are easily complete.
Frequency of Salary Payment ?
In Norway, employers can choose from a range of times in which to pay their employees. These times include daily, weekly, bi-weekly, monthly, quarterly, and annually. In general, most employers choose to pay their employees once a month, usually on the last working day.
Invoice / Payslips required ?
In Norway all employees are entitled to receive a pay slip at the same time as receiving their regular wage. The Pay Slip is designed to show the employee their gross wage for that time, the total deductions they have had removed from their income, and their total salary paid to date for that current year.
Minimum Wage ?
In Norway there is no National Minimum Wage. In order to calculate workers wages, individuals pay normally falls into a national scale which is negotiated by Labor, their employers and local governments.
Working Hours
In Norway, workers are only allowed to work a maximum of 9 hours a day, and 40 hours per 7 day week. As a rule, the rest period must be 11 hours in the course of 24 hours and 35 hours in the course of 7 days, and, as a rule, time off shall be taken on Sundays or public holidays. Employees are entitled to a break if their daily working hours exceed 5.5 hours, and breaks shall total 30 minutes if the daily working hours exceed 8 hours. Work in excess of normal working hours shall only occur if it is specifically required and is of a limited duration, and this work shall then be compensated with an overtime supplement of at least 40 per cent of normal hourly pay.

Norway Immigration and Work Permits

Foreign workers are required to have the proper visas and work permits in Norway, as established by immigration laws.  Work permits must be secured for employees, and sponsored by a locally licensed and incorporated entity, which can be a problem for companies just entering the Norwegian market.  If you have yet to complete the incorporation process you can use an outsourced management company or GEO Employer of Record to sponsor the employee for the necessary permits.

Your Options

Have Your Own Company?

Different rules apply whether employers employ someone who is an EU/EEA national or not.

All EU/EEA nationals are entitled to work in Norway and can move to the country and start working right away, but they must register with the police no later than three months after arriving in Norway.

In case the employee has not yet registered with the police, the employer must give the worker an employment certificate or an employment contract that contains the same information as the employment certificate. The worker has to show this to the police when he or she registers.

As the worker needs to register him/herself into the system, the employer can help him/her by entering information in the Application Portal Norway and booking an appointment with the police, but the worker must go to the police in person.

In case the worker already has a registration certificate, he/she can start working at once and does not need to register again.

When employers hire a foreign national to work in Norway, the employee must obtain a residency permit. What residence permit an employee should apply for usually depends on his/her competences and type of work he/she will be doing in Norway. Once the employee has these information, he/she can apply for a a residence permit online at the Norwegian Directorate of Immigration.

Documentations required differ for each employee and it is necessary to upload individual information within the UDI Immigration Page.

Fee: Residence permits for work (also renewals) NOK 3,700 (Approx. USD 410)

Processing Time: For an accurate calculation please consult the Case Processing Time Page.

Use the Shield GEO Employer of Record Solution?

Once you get in touch with us, one of our consultants will take all the work off your hands, coordinate with our local partners to get all the required permits organised, provide the processing time, costs, document-checklist and keep you informed through the process. Contact us to know more.

Types of visas in Norway

Category Description of Visa
Work Permit (Skilled Worker)

In order to apply for a work permit in Norway the required documents are as follows:

1. Passport and copy of all used pages in passport;

2. Signed cover letter from the Application portal (or application form);

3. Two new/recent passport size photos with white background;

4. Documentation which shows that the employee has somewhere to live in Norway;

5. The UDI’s Offer of employment form, completed;

6. Documentation of the employee’s education, containing information about the duration of the education, the level and the content;

7. Documentation of work experience containing detailed information from former employers about how long the employee worked in the company, what training he/she was given, his/her tasks and qualifications;

8. CV;

9. UDI’s checklist, filled out and signed.

Additional Documents for some applications:

1. If the employee submits his/her application in a country other than his/her home country, documentation that he/she has held a residence permit for the last six months in this country;

2. If the employee submits his/her application in Norway, documentation which shows that he/she is in Norway legally;

3. If the employee is going to work in a position which is less than 80 percent, explanation/ documentation of this;

4. If the employee is going to work for more than one employer, explanation/ documentation of this;

5. If the offer of employment is not continuous, explanation/ documentation of this;

6. If the employee is to work in a profession for which recognition or authorisation is required, documentation that he/she has been recognised or authorized by the relevant recognition authority for his/her profession;

7. If the employee is to carry out skilled work through a recruitment agency, a list of the assignments that he/she is going to do, and a statement from each of the clients which confirms that he/she is going to do an assignment for them. Also a printed page which shows that the recruitment agency he/she is going to work for is registered in the The Labour Inspection Authority’s register of recruitment agencies;

8. If the employee would like your employer to apply on his/her behalf, or for his/her employer or another person to be able to talk to The Directorate of Immigration on his/her behalf, power attorney form;

9. If the employee wants to work during application processing, for “Early employment scheme”: Employer’s certificate for tax and valued added tax. Also residence permit during application processing: a letter where he/she requests this.

Documents which the employee must hand in when he/she applies to renew his/her residence permit are:

1. Passport and copy of all used pages in passport;

2. Signed cover letter from the Application portal (or application form);

3. The UDI’s Offer of employment form, completed;

4. His/her last three pay slips;

5. If the employee is temporarily laid off (permittert): a decision letter from NAV which states that he/she has been granted unemployment benefits;

6. Special documentation if he/she has been asked for such in prior decisions;

7. If the employee is in one of the situations described under “Additional documents for some applications”, he/she must submit the same documents as when he/she applied for the first time;

8. UDI’s checklist, filled out and signed.

Processing Time: Processing times can vary depending from the type of application and the channel where the applicant handed in the application. As such, we suggest to consult the UDI’s Case Processing Times page.

Fee: 3 700 NOK or USD 420.

Intra Company Transfer

You must apply for this type of permit if you are employed in an international company abroad and are going to carry out an assignment for the Norwegian branch of the international company.
Requirements relating to your education/qualifications

You must have one of the following types of education/qualifications:

1. A completed vocational training programme of at least three years at upper secondary school level, for example as a joiner or health worker. There must be a corresponding vocational training programme in Norway;

2. Completed education or degree from a university/ university college, for example a bachelor’s degree as an engineer or nurse;

3. Special qualifications that you have obtained through long work experience, if relevant in combination with courses etc. A permit is only granted in such cases in exceptional circumstances. Your qualifications must be equivalent to those of someone who has completed vocational training.

Requirements relating to the employment relationship:

1. You must be employed by an enterprise abroad that has a contract with an enterprise in Norway to carry out an assignment in Norway;

2. The enterprise in Norway must have a registered business address here;

3. As a rule, the offer of an assignment must be for one specific enterprise in Norway;

4. The pay and working conditions must not be poorer than is normal in Norway;

5. The enterprise in Norway must be able to document that the enterprise abroad meets the requirement for pay and working conditions during the assignment;

6. Your qualifications as a skilled worker must be relevant to your ability to complete the assignment;

7. If you are going to carry out an assignment in an occupation for which recognition or authorisation is required (external website), you must have such recognition or authorisation;

Rights and obligations:

1. If you are going to carry out assignments other than that described in the contract or for another enterprise, you must apply for a new residence permit.

2. You can be granted a permit for two years at a time. You can be granted this type of residence permit for up to six years, then you must live outside Norway for two years before you can apply for a new such permit.

3. The period you have this permit does not count if you later wish to apply for a permanent residence permit.

4. If your assignment lasts for more than six months or if you are employed in an international company (and are to go on assignment for the Norwegian branch of the company), your spouse or cohabitant and your children can apply for residence permits in Norway.

Processing Time: Processing times can vary depending from the type of application and the channel where the applicant handed in the application. As such, we suggest to consult the UDI’s Case Processing Times page.

Fee: Approx. 580 NOK or USD 65.

Business Visa (Schengen Visa Type C)

As a signatory of the European Economic Area (EEA) Agreement, Norway is an integrated part of the European Internal Market. In line with other European countries, Norway promotes free trade, is open to foreign investments and has also in this respect a business friendly framework.

A Schengen Visa may be granted to applicants who are going to Norway for tourism, business or family visits, etc. when the intention is to return to the applicant’s country of residence afterwards.

Visa can be valid for a maximum of 90 days in the course of a period of 180 days. The visa can normally not be extended after you have entered the Schengen area.

Steps on How to Apply:

1. Print the Checklist appropriate to your application then collect and gather the documents needed in your application.

2. If you think you are ready to apply, register your application online and book an appointment to submit application.

Please note that applying via Application Portal Norway is the easiest, fastest and cheapest way to register your application.

3. Submit your application personally at the Norway Visa Application Centre on the date of your appointment and bring your documents.

Processing Time: Approximate processing time is 15 days. It is counted from the day the Embassy receives the complete application that was submitted to Norway Visa Application Centre.

However, case processing time depends on each individual case. Applicants are advised to apply several weeks before their intended journey, but not more than 90 days in advance.

Fee: Approx. 580 NOK or USD 65.

Setting up a company in Norway

When setting up a company you may want to consider these factors:

  1. Business Factors

    Among the factors to consider when setting up businesses, business factors are relevant and in particular:

    • The industry and type of business
    • Nationality of the headquarters/individual(s) and
    • Presence of existing trade agreements or relationships

     

  2. Location

    Location will be another factor. Separate cities and regions may have different rules, costs and availability. It is always recommended to seek advice from relevant professionals, such as business or legal advisors, accountants and others depending on your needs.

  3. Language

    Although 95% of the population speaks Norwegian, English is spoken by approximately 90% of Norwegians.

Your Options

Depending on the size of the entity, organisation form and the minimum share capital, Norway recognizes two main forms of business: the companies (with private or public limited liability) or the partnerships (general or limited). There are also the sole proprietorships (the smallest form of business) and the branches of the foreign companies.

In 2013 Norway made starting a business easier by reducing the minimum capital requirement for private joint stock companies.

In 2015 Norway made starting a business easier by eliminating the requirement for limited liability companies to have their balance sheet examined by an external auditor if the capital is paid in cash.

In 2016 Norway made starting a business easier by offering online government registration and online bank account registration.

Private Limited Liability Company - Aksjeselskap (AS)

The Norwegian Limited Liability Company is commonly used in order to set up small and medium businesses. Multinational companies usually use this legal entity when they intend to set up a Norwegian subsidiary.

The minimum paid in capital is NOK 30,000 (approx. AUD 4,500) in share capital. A minimum of two directors must be appointed, one of whom must be a Norwegian or European citizen.

These are the steps required to set up this corporate vehicle (the time required to complete the process is approx. 4 days):

Deposit start-up capital in a bank

The partners have to deposit a paid-in minimum capital of at least NOK 30,000 (approx. AUD 4,500) in a bank. The procedure can be done electronically through the bank’s online platform. One of the commonly used banks by private persons and business owners is DNB ASA and the account remains blocked until the company has been registered.

Register with the Register of Business Enterprises and file for VAT registration

The web-based filing system allows for electronic signature of the registration form and for the possibility to upload all attachments electronically.

It is still possible to file all documents manually by regular mail as well as, in some cases, registration inquiries cannot be filed online and must be filed by mail.

VAT registration is required when the company’s turnover is more than NOK 50,000. VAT cannot be charged on goods and other items before VAT registration is completed. However, in certain cases the company may register for VAT before starting business operations. The VAT registration form can be submitted at the same time as filing for company registration.

The above procedure costs between NOK 5,666 (approx. AUD 900) and 6,797 (approx. AUD 1,000) depending whether it is done electronically or manually.

Arrange for mandatory occupational pension plan for employees in a pension agency

The employer must arrange for a compulsory occupational pension plan for his or her employees. The fees vary with the benefits and level of coverage in the pension plan. The minimum requirement is 2% of each employee’s salary (within average levels of salaries). Pension scheme must be established within 6 months of the date on which the obligation to have an occupational pension scheme arose.

The employer enrols in the mandatory workers’ injury insurance

The employer must have a workers’ injury insurance for the employees and the insurance company is chosen by the employer.

The Norwegian public limited company (ASA)

A Norwegian public limited company (PLC) has much in common with an AS.

The registration at the stock market is important because it is a modality of increasing the share capital. The major decisions are also taken by the general meeting of the shareholders while the daily decisions can be taken by the members of the management board.

The company can be incorporated by a single shareholder, who may be of any nationality and residence. In accordance with Norwegian regulations, the shareholder is required to:

  • In order to go public, a Norwegian Joint Stock Company must have a share capital of at least NOK 1 million (approx. AUD 156,000);
  • Appoint at least 3 directors, at least 2 of whom must be residents in Norway.

All Norway PLCs are required to appoint a statutory auditor at the moment of incorporation and submit audited annual financial statements.

Norwegian company law requires that companies:

  • Have at least 1 director designated by the employees if there are more than 30 employees;
  • Have both genders represented on the company’s board if more than 50 people are employed.

Sole Proprietorship

A sole proprietorship is a form of incorporation in which a ‘physical person’ is liable for a business. There are no separate acts of law regulating sole proprietorships.

The owner of a sole proprietorship must in general be of age (18 years). He or she does not have to be a resident of Norway. However, the enterprise is required to have an address in Norway. The owner of a sole proprietorship is not obliged to set aside funds for the enterprise, since he or she is personally liable in any case.

Sole proprietorships that have employed more than 30 people (on average) during the past three financial years are subject to some of the same requirements as partnerships. These requirements concern the rights of employees to be represented at partnership meetings and, if applicable, on the board.

Steps required to register a sole proprietorship:

In order to register a sole proprietorship, the following information must be provided upon registration:

  • Name of the enterprise;
  • Owner;
  • Type of business activity to be carried out;
  • Municipality and address of business premises;
  • General manager if the enterprise has one.

Names of sole proprietorships shall contain the owner’s surname and all sole proprietorships can register free of charge with the Central Coordinating Register for Legal Entities. The enterprise will be assigned an organization number. Sole proprietorships also have a right to register in the Register of Business Enterprises.

Registration in the Register of Business Enterprises is subject to a fee that depends on which form of incorporation is registered and whether a paper form or electronic registration is used.

If the sole proprietorship has at least five employees or is to engage in the resale of purchased goods, it has a duty to register in the Register of Business Enterprises.

When the coordinated register notification has been filled in, the form is sent for signing.

Partnerships

Partnerships in Norway are subjected to the provision of the Partnership Act 1985. According to the Partnership Act, a partnership represents a commercial business established for the joint account of two or more partners, one of whom must have unlimited personal liability for the total obligations of the business. The term partnerships refers also to the situation in which two or more partners have unlimited liability for parts of the obligations and the combined parts constitute the total obligations of the business.

A partnership in Norway is established by either two or more individuals or legal entities, who enter into a partnership agreement. Except for internal partnerships, all partnerships must have a written partnership agreement.

The agreement must be drawn up referring to and according to the stipulations set out in the Norwegian Partnership Act.

The agreement should include:

  • The name of the partnership;
  • The name and place of residence of the partners (except for silent partners);
  • The goal/purpose of the partnership;
  • The municipality of the head office of the partnership;
  • Whether the partners will make contribute capital to the partnership;
  • Value of any assets.

The Norwegian Partnership Act governs the partnership if no written agreement is drawn up. However, a written agreement is advisable.

General partnerships and general partnerships with shared liability do not need a minimum committed capital, while limited partnerships must follow regulations regarding capital.

Each limited partner must have a committed capital of at least NOK 20,000 (approx. AUD 3,100), and the general partner must have at least 10% of the total committed capital.

The committed capital of the general partner must be at least NOK 2,223 (approx. AUD 350) and the minimum committed capital of the company must be NOK 22,223 (approx. AUD 3,500) in a limited partnership. In order to register a limited partnership with the Norwegian Register of Business Enterprises, it is essential that each partner contribute at least 20% of their committed capital. Additionally, the partners have to pay in a further 20% of the committed capital within two years after the date of registration of the partnership.

There are no obligations in the Norwegian Partnership Act regarding the committed capital of an internal partnership. All partnerships must be registered with the Norwegian Register of Business Enterprises, apart from internal partnerships. No stamp duty is applicable when you register partnerships, committed capital or changes in the committed capital.

There are five forms of partnership:

General Partnership (ANS)

All partners are general partners with unlimited liability, and are jointly and severally liable.

General Partnership with Shared Liability (DA)

This differs from the general partnership in that the obligations are unlimited, but is shared pro rata between the partners.

Limited Partnership (KS)

A limited partnership must have one partner with unlimited liability for the responsibilities of the partnership, and at least one limited partner with liability limited to the partner’s share of the capital.

Internal Partnership (indre selskap)

This partnership must have at least one general partner with unlimited liability. If there is just one general partner, it is essential to have at least one silent partner. Silent partners can have unlimited liability or liability limited to the partner’s share of the capital.

While the general partners are given any and all rights or obligations, the silent partners are not involved in this process.

Branch

A branch is considered the establishment of a business by a foreign company in an office run by local management, employing local workers. A branch is both easier to set up and close down than a limited liability company or a partnership.

Though not an actual separate entity, it is a registered office, or department, of a foreign company. The foreign company is liable for the debts of the branch without limitation. This responsibility exists even after the branch has been closed down.

If the branch will hire employees, it is necessary to establish mandatory workers’ injury insurance and the occupational pension plan.

There is no minimum share capital that has to be registered at incorporation. The capital and the branch’s assets must be assured by the parent company.

A list with all the branch’s assets will also include the assets of the foreign company. In case of liquidation, these assets can be used to cover the debts.

A Norwegian branch must pay the same taxes as a local company, with some exception in the cases where the company is from a country that has signed double tax treaties with Norway.

In this case, the withholding tax on dividends, interests and royalties may be exempt or decreased and the corporate tax on income may be credited or exempt.

The name of the branch must include “Norsk avdeling av utenlandsk foretak” (Norwegian branch of foreign company). Certain limitations apply regarding the name of the company.

It is not essential for a branch to have a separate board of directors or a general manager. However, if there is no general manager, the branch must register a contact person with the Norwegian Register of Business Enterprises, who must be a resident of Norway and can be either an individual or a company.

Norway has a favorable attitude to foreign investment and establishing a branch in Norway is a popular choice. There are a few restrictions on the name of the branch – it is compulsory to end in “Norsk avdeling av utenlandsk foretak” (Norwegian branch of foreign company) – but generally it is a straightforward procedure.

These are the requirements regarding Norway branches:

  • Memorandum and Articles of Association of the parent company
  • A copy of the parent company’s Certificate of Incorporation
  • A copy of the parent company’s Certificate of Good Standing
  • A formal resolution from the parent company’s board of directors detailing the decision to establish the branch
  • A Norwegian branch representative should be assigned

There is no share capital required to set up a Norwegian branch.

The documents detailed above are required for branch registration with the Norwegian Central Coordinating Register for Legal Entities and must be officially notarized and translated into Norwegian by a certified translator.

The branch can only begin commercial activities after all the requirements mentioned above have been fulfilled.

If a branch closes down, it is essential to deregister in the Register of Business Enterprises.

Time: The whole process does not take longer than ten working days if all the documents are accurate.

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Norway, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Norway they must also decide whether they will administer that employment internally or use a Global Employment Organization to handle payroll and Employer of Record responsibilities.  A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment in Norway
  • the company needs help with tax, employment, immigration and payroll compliance in Norway

The complexity of employment regulations in Norway makes use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Norway allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Norway.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Norway. Read more about outsourced employment through Shield GEO.

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